"T approaching dire financial straits" by Noah Bierman, Globe Staff | December 14, 2008
While public debate and anger have been directed toward higher tolls and dysfunction at the Massachusetts Turnpike Authority, another agency - the one that runs buses, subways, and trains - could be on the verge of an even worse financial crisis.
New financial setbacks and grim projections have observers inside and outside the Massachusetts Bay Transportation Authority worried about large fare increases and cuts in public transit service over the next 12 to 18 months. One watchdog says the agency is near bankruptcy....
On top of that, the T, along with transit agencies around the country, is asking for federal backing to protect it from defaulting on financial deals that have threatened to unravel amid the nation's credit crisis.... the MBTA's debt is $8.1 billion, including interest....
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As he prepares for next year's budget, Jonathan Davis, the agency's chief financial officer, has also been to Washington to lobby for help with a complicated investment problem. In the 1990s, the T and other transit agencies were encouraged by federal officials to sell their train equipment to banks and then lease it back. The arrangement brought the T $53 million in upfront payments. In return, the private banks realized a tax benefit....
NOT a GOOD IDEA at all!!! Thanks, Bill Clinton!
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Related: Banks Bend U.S. Cities Over
